Various payment methods can be used when purchasing goods and services (also referred to herein as “purchase transactions”). However, it is possible for a criminal to fraudulently use a payment method, and particularly electronic payment methods such as credit cards and debit cards, which typically belong to some other person. The financial industry has taken efforts to ameliorate harm from fraud.
For example, a credit card issuer could call a cardholder after a credit card transaction is made in order to confirm that the cardholder was the one who was responsible for the transaction. If the cardholder denies making the credit card transaction, it may be the case that the transaction was fraudulent. After receipt of cardholder-confirmed fraudulent activity, the issuer can cancel the card, issue a new card, send the relevant information to a recovery department, etc. The issuer may or may not also process an affidavit and check for a refund. Finally, the issuer may or may not process a chargeback. The entire process can take weeks. Frequently, a merchant is contacted too late to do anything about the fraudulent transaction.
Another example for ameliorating the harm from fraud includes where merchants the merchant declines or cancels a transaction after receiving a pre-authorization (e.g., from an acquiring bank or an issuing bank) for payment by a credit card. In such instances, the merchant may decline or cancel a transaction based on merchant's suspicion that the purchase transaction is fraudulent, or based on some other concern the merchant has with the purchase transaction. In this way, the merchant can proactively avoid the hassle of dealing with some fraudulent payment transactions. Unfortunately, by declining or canceling the purchase transaction in this manner, the merchant also assumes the risk of being incorrect (e.g., suspicion of fraud was incorrect) and prematurely declining or canceling valid/legitimate purchase transactions. This can not only result in loss of sales for the merchant, but also cause the merchant to gain a less than favorable reputation amongst current and potential purchasers.
Other limitations of the relevant art will become apparent to those of skill in the art upon a reading of the specification and a study of the drawings.